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TMI Blog1972 (10) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... that is referred for our determination is : "Whether, on the facts of the case, the Tribunal is right in holding that the Wholesale Cloth Dealers' Importers' Group did not form a partnership ?" Due to scarcity of cloth in C.P. and Berar, the Government evolved a scheme for distribution of cloth under its supervision and control. Three categories of dealers in the new set up were classified. Under this scheme they were known as importers, semi-wholesalers and retailers. Government selected and appointed certain people out of the wholesale dealers of cloth who were importers of cloth from other States as a group of importers. These importers were not permitted to do business in cloth except as directed by the Government ; no person other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal preferred by the assessee. He took the view that in fact all the members were doing business jointly ; that definite shares were fixed ; that profits were being divided in definite shares and this in his opinion was sufficient to constitute them into a partnership. Before the Appellate Assistant Commissioner, an application was made in the alternative for registration of the partnership-firm. Such application for registration was rejected by him on several grounds stated in his order. On appeal by the assessee, the Tribunal held that the scheme of distribution of cloth was organised and carried out by the Government through the above persons ; that no business was carried on in partnership and that it accordingly set aside the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement existed between the five persons of the wholesalers' group. The members of the group themselves have no choice as to who should be selected for the wholesalers' group, the selection being made by the Government, the members so selected have no choice but to act as contemplated under the scheme. Thus, there is no evidence whatsoever that an agreement existed between the persons concerned to form a partnership of the importers' group. The matter, however, does not rest there. It is further required that before the partnership is formed, the business must be carried on by all or any one of the persons concerned, acting for all In view of the scheme and policy laid down by the Government, it is the nominee chosen by the Government who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o consumers. There were two sets of distributors, importers and semi-wholesalers. The Government appointed a nominee for each set. The importers had to take delivery of the bales from the mills according to the quota allotted by the Government and distribute the quota in bales to semi-wholesalers in accordance with the orders of the Government. The quota of goods to be supplied to each semi-wholesaler was fixed by the Government but the goods were not to be supplied to him but were to be received from the importer by a nominee of the semi-wholesalers appointed by the Government on behalf of all. These semi-wholesalers supplied the finance to the nominee in proportion to the quota. After the monthly quota was distributed to the retailers the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court was that the group was an association of persons and could be assessed on its profits as such to income-tax and excess profits tax. It made no difference that the business was carried on because the Deputy Commissioner of the district had appointed the members constituting the group to import and distribute the cloth. As there is nothing to show that there was an agreement entered into between the members of the group and whether any business was to be carried on by them or on behalf of them and as there is no discretion as to the manner in which the business was to be carried on, the essential ingredients to form a partnership are lacking in the present case. In the circumstances, our answer to the question is in the af ..... X X X X Extracts X X X X X X X X Extracts X X X X
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